Oracle Financials Accounting Hub in the Banking Industry
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Transcript of Oracle Financials Accounting Hub in the Banking Industry
1
Agenda
! Introduction ! Case Study - Overview ! Integration Challenges in a non FAH world ! FAH Solution Offerings ! FAH Process Overview ! Implementation Approach ! Lessons Learnt ! Application Snapshot ! Q&A
Copyright 2011 Fujitsu America, Inc.
2 Copyright 2011 Fujitsu America, Inc.
Global Oracle Practice
! Fujitsu / Oracle 20+ Year Relationship ! End-to-End Solutions
! Strategic Assessments, ! Implementations &Upgrades ! Hosting ! Managed Services / Support
! Center of Excellence ! Thought Leadership ! Proof of Concept Environment ! ROI Discovery Sessions
3 Copyright 2011 Fujitsu America, Inc.
Oracle Global Strategic Partner
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Case Study - Overview
! One of the largest Japanese Bank ! Current Oracle footprint
! Oracle EBS 11.5.10 ! Oracle GL, AP, FA
! Many legacy systems interfacing directly to GL ! Reporting Data extracted from various sources ! The Big Question –
! R12 upgrade with or without FAH? ! How to handle multiple GAAP reporting?
! Proof of Concept Engagement ! Three Legacy System
Copyright 2011 Fujitsu America, Inc.
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Case Study - Overview
! POC - Objectives ! Multi-GAAP Accounting ! Drill Down from GL to Sub-Ledger Journals and Supporting Reference Data ! Supporting Reference with Balances ! User Transaction Identifiers ! Draft Accounting ! Foreign Currency Transaction Accounting ! User Transaction Identifier Addition ! Accounting Rule change and its Impact ! Event Modeling v/s Pass through Journal Entries ! Other FAH capabilities like Import Export and Copy application definitions
Copyright 2011 Fujitsu America, Inc.
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Integration Challenges (Non FAH World)
Copyright 2011 Fujitsu America, Inc.
Black Box (Rules,
Mappings, Acct Derivations etc.)
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
Oracle General Ledger
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Integration Challenges (Non FAH World)
Copyright 2011 Fujitsu America, Inc.
! Entire Intelligence of generating the Accounting entries is hidden
! The Flow is One-Directional ! Complete Audit trail is not possible ! System is not Flexible ! No Standardization ! System is not Scalable ! Reusability is very Limited ! Reconciliation Issues ! Lack of confidence in the Financial
Figures ! High Cost of Maintenance
Reclassification of Journal Entries after Journals are created in GL
Not Capable for Multi GAAP Accounting
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Integration Challenges (Non FAH World)
Copyright 2011 Fujitsu America, Inc.
New System Integration
! Big IT Project ! Testing Cycles are huge ! Integration is time consuming ! Increased Manual Intervention ! Addition to the Black Box ! Intelligence still hidden ! Increased Lack of confidence in the
financial figures
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FAH Solution Offerings
! Single Source of Accounting Truth
Copyright 2011 Fujitsu America, Inc.
Financial Accounting Hub
Loans System
Deposits
Payments
General Ledger
Analytics
Reporting
Centralized Accounting Rules Centralized Accounting Repository
Maintains configurable, detailed Information Contextual transaction information for reconciliation
Quickly update Accounting Rules
Multiple GAAP representation Drill down from GL to FAH to Source System Configurable Supporting Reference Balances Intuitive User Interface for Business Analyst
Inbuilt Validations, Error Handling, Version Control
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Financial Accounting
Hub
FAH Solution Offerings
! Multiple Accounting Representation
Copyright 2011 Fujitsu America, Inc.
Primary Ledger (US GAAP)
Secondary Ledger (IFRS)
US GAAP Subledger Accounting Method
IFRS Subledger Accounting Method
US GAAP Application Accounting Definition
IFRS Application Accounting Definition
Accounting Event
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FAH – What’s not in it
! Data Extraction ! Event Creation ! Calculation Engine for Source System calculations ! Inbuilt Intelligence for IFRS Accounting or any GAAP Accounting
Copyright 2011 Fujitsu America, Inc.
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Financial Accounting Hub Process Overview
Copyright 2011 Fujitsu America, Inc.
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Accounting Method Builder
Copyright 2011 Fujitsu America, Inc.
Application
Event Entities System Transaction Identifiers
Event Classes
Event Types
Sources Transaction Objects
Journal Line Definition Header Assignments
Journal Line Types
Account Derivation Rules
User Transaction Identifiers
Line Description Supporting References
Header Description & Supporting References
Accounting Method Builder (Building Accounting Rules)
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Financial Accounting Hub Uptake Process
Copyright 2011 Fujitsu America, Inc.
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Event Model
Copyright 2011 Fujitsu America, Inc.
Sub Ledger Application
Entity Code 1
Event Class 1
Event Type 1
Event Type 2
Event Class 2
Entity Code 2
Event Model
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Event Model: Event Types
Copyright 2011 Fujitsu America, Inc.
Sub Ledger Application
Entity Code 1
Event Class 1
Event Type 1
Event Type 2
Event Class 2
Entity Code 2
Event Model
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Event Model: Event Types
! Lowest level of the Event Model ! Represent the business operation that can be performed on a
transaction/document ! Event Types determine which Accounting Rules should be used ! Journal Information (lines, accounts, descriptions, supporting
references) are associated with event types ! Provides the accurate name and description of the business event
which gave rise to the subledger journal entry
Copyright 2011 Fujitsu America, Inc.
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Event Model: Event Classes
Copyright 2011 Fujitsu America, Inc.
Sub Ledger Application
Entity Code 1
Event Class 1
Event Type 1
Event Type 2
Event Class 2
Entity Code 2
Event Model
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Event Model: Event Classes
! Groups accounting event types into user oriented transaction categories. (Invoice creation, Invoice Approval, Invoice Cancellation are grouped in a class called Invoices)
! Accounting definitions usually differs by Event Classes ! Transaction Objects, Sources, default assignments of accounting
attributes are made at the Event Class level. ! GL Journal Categories are tied with Event Classes
Copyright 2011 Fujitsu America, Inc.
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Event Model: Event Entities
Copyright 2011 Fujitsu America, Inc.
Sub Ledger Application
Entity Code 1
Event Class 1
Event Type 1
Event Type 2
Event Class 2
Entity Code 2
Event Model
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Event Model: Event Entities
! Highest level grouping of similar transactions ! Groups event classes into technical transaction model ! All underlying transactions share the same identifier (System
Transaction Identifier) ! All underlying transactions share the same data structure ! Often logically corresponds to a single document used as a basis
for several related transactions
Copyright 2011 Fujitsu America, Inc.
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Event Model: Subledger Application
Copyright 2011 Fujitsu America, Inc.
Sub Ledger Application
Entity Code 1
Event Class 1
Event Type 1
Event Type 2
Event Class 2
Entity Code 2
Event Model
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Event Model: Subledger Application
! Partitioning of Subledger Data ! GL Journal Source is aligned at this level ! Generally this level aligns with a third party source system ! Multiple source systems can link to the same subledger application ! Application Accounting Definitions cannot be shared across
applications
Copyright 2011 Fujitsu America, Inc.
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Event Model: Example
Copyright 2011 Fujitsu America, Inc.
Payables
Invoices
Standard Invoice
Invoice Validation
Invoice Cancellation
Invoice Adjustment
Prepayment Invoice
Credit Memo
Payments
Event Model
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Custom Build Accounting
Transformation Engine
Implementation Road Map
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
Oracle General Ledger
Oracle Financial
Accounting Hub
Future Architecture
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
Oracle General Ledger
Current Architecture
Implementation Approach
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Custom Build Accounting
Transformation Engine
Incremental Implementation Approach
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
Oracle General Ledger
Current Architecture
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Custom Build Accounting
Transformation Engine
(Light Mode)
Incremental Implementation Approach
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
FAH Pass
Through events
Incremental Approach
Oracle General Ledger
! Introduce FAH Pass-Through System ! Events are processed in the custom engine
! Mapping between legacy Accounts and new Accounts now handled by FAH
! Multi GAAP Accounting Possible
! Validations managed by FAH ! No Accounting Rules in FAH
pass-through system yet. ! Accounting repository starts
to get maintained ! Additional information can be
introduced in FAH at this stage by UTI and supporting references
! FAH framework is introduced in the architecture
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Custom Build Accounting
Transformation Engine
(Light Mode)
Incremental Implementation Approach
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
FAH Pass
Through events
Incremental Approach
Oracle General Ledger
! Move one system to Event Based Accounting FAH Model
! Move the accounting rules from the custom engine to FAH
! Leverage the full capabilities of the FAH transaction model
! User Transaction Identifiers and Supporting references are fully configured
! Maintain Audit trail and full drilldown functionality
Event Based
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Custom Engine
(Light Mode)
Incremental Implementation Approach
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
FAH Pass
Through events
Incremental Approach
Oracle General Ledger
! Continue moving one system at a time to the Event based Accounting FAH model
! Move the accounting rules from the custom engine to FAH
! Leverage the full capabilities of the FAH transaction model
! User Transaction Identifiers and Supporting references are fully configured
! Maintain Audit trail and full drilldown functionality
Event Based
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Incremental Implementation Approach
Copyright 2011 Fujitsu America, Inc.
Source System 1
Source System 2
Source System 3
Source System 4
Source System n
Oracle General Ledger
Oracle Financial
Accounting Hub
Future Architecture
! All legacy systems directly integrated using Event based Accounting FAH model
! Entire custom accounting engine can be decommissioned
! Low Risk approach ! Lessons learnt from one phase can be
effectively applied to future phases thereby creating a highly efficient Financial Accounting Hub
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Implementation Considerations
! Big Bang or Incremental Implementation Approach ! How many Applications should you define ! Event Model & Transaction Objects Model ! Event Creation Mechanism (Pull or Push) ! Legacy Application Interface Strategy ! Supporting References with Balances ! Data Volume and Performance ! Security Model
Copyright 2011 Fujitsu America, Inc.
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Lessons Learnt
! Spend sufficient time for Event Modeling and Data Modeling (Transaction Object Analysis and Build)
! Document entire Transaction life cycle and each event therein ! Avoid Using Custom Sources ! Give Unique names to Source Columns across transactions ! Move mapping rules logic from custom code to FAH ! Consider Inquiry and Reporting requirements during Design phase ! Start small during design and build, but perform load testing with
full volume before Go-Live ! Keep it simple, yet keep it Agile for future requirements
Copyright 2011 Fujitsu America, Inc.
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Application Snapshot
Copyright 2011 Fujitsu America, Inc.
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Application Snapshot
Copyright 2011 Fujitsu America, Inc.
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Anil Patil [email protected]